But Chief Executive Jamie Dimon said the largest U.S. bank by assets was seeing signs of improvement in loan demand and credit quality as the economy recovers.

The bank's shares fell 2.9 percent in premarket trading. Through Thursday, the shares had climbed 11 percent this year.

JPMorgan is the first major U.S. bank to announce results for the period. Its figures show Wall Street firms such as Goldman Sachs Group Inc and Morgan Stanley are in for a tough quarter as investment banking results suffer.

Others such as Bank of America Corp and Citigroup Inc, which also report results in the coming days, could benefit from the stronger business loan demand that JPMorgan experienced, but they continue to face problems in investment banking and housing loans.

JPMorgan's results show that there are major headwinds against the banking industry and it requires a strong management team to battle the headwinds, said Rick Meckler, president of investment firm Libertyview Capital Management in New York.

The bigger negatives tend to be the housing and mortgage situation and investors questioning, 'Have we really hit bottom in this sector or is this just a black hole?'

JPMorgan said fourth-quarter net income was $3.72 billion, or 90 cents a share, down from $4.83 billion, or $1.12 a share, a year earlier.

Wall Street analysts, on average, had expected 90 cents a share, according to surveys by Thomson Reuters I/B/E/S.

The earnings show how well JPMorgan can be managed in one of the roughest times, said money manager Michael Holland, founder of Holland & Co. They were able to pull off a meet-or-beat quarter.

JPMorgan highlighted improvements in credit quality and reduced its provisions for credit costs.

The bank's return on equity, a key measure of shareholder profits, fell to 8 percent from 11 percent in the fourth quarter of 2010 and from 9 percent in the 2011 third quarter.

The company's quarter-end share count declined 4 percent from a year earlier as it bought back stock.

We all knew the fourth quarter would be difficult, said Gary Townsend of Hill-Townsend Capital. But the overall economic outlook has been improving from an economic standpoint starting in December.

(Additional reporting by Jed Horowitz in New York, Rick Rothacker in Charlotte, North Carolina, and Ben Berkowitz in Boston; editing by John Wallace)